Thursday, June 4, 2009

The startup cost of Forex

Lately I've received a few emails asking the same question. How much would it be to actually start up a Forex account?
People seem interested in the concept, but are skeptical or wary of actually opening the door to the Forex world, and are afraid of losing more money then they actually deposit into the account. Especially the last part is a concern for many, and it has been for myself until I fully researched several brokers.

First things first, and the bottom line is you will never lose more money then you deposit UNLESS you sign up for margin account.
When you sign up for a margin account it is clearly stated with the broker that you do so! and in most cases, if not in all, requires a credit check, because it's not any different then opening a credit card. Your broker would provide you with a credit line that you would use to trade Forex so you can have more money to gain higher returns. Although I highly disapprove of this method and you should never do this since it carries a tremendous amount of risk. My advice is to only invest in Forex with money you can afford to lose!
But back to the main question. The start up investment of a broker of Forex used to be amounts like $1,000, $5,000 or higher. Nowadays it can be as little as $25! You read that right. Twenty five dollars with no risk of losing more then that can put you in the exciting world of Forex. But what would be your return? That depends completely on when you trade, how, and what currency, the amount of risk you are willing to take and how much your stomach can handle, hehe. But the bottom line is that there is money to be made if handled well, think about it, millions of other people areound the globe have done it and still do it every day, MAKE MONEY with Forex, and now it's time to cover the basics and beyond to actually do it ourselves, share strategies, exchange tips and improve our trading plans.
That's what this website is for. To share a few strategies and exchange ideas to advance ourselves into currency trading.
There are success stories out there where people started with $50 and turned it into thousands of dollars.
By now I probably have you all pumped up for foreign currency trading and can't wait to jump in the markets.
But keep in mind that Forex carries a huge amount of risk also and is not for the faint hearted.
Forex is certainly NOT easy (although there are websites that claim otherwise) and takes alot of time if you want make the correct trades consistently. I don't work for any Forex broker and try to sell any service (have you seen me advertising any brokers here :P) but simply try to educate ourselves (me and my readers) of the opportunities and dangers Forex Trading carries.
By the way, speaking of startup cost, don't believe in the hype nowadays of Forex Robots (software you install on your computer that does Forex trades for you, that can 'sense' whether the market goes up or down and makes the profitable trade accordingly), that would be categorized as starup cost also since companies that offer these software packages offer this a Forex startup 'investment'. Nothing can be further from the truth. Think about it, if their 'robots' were so phenomenal wouldn't every investment firm use them and post an anual return of 128% (which they claim to be) instead of the usual average 16%. No robot can predict the way the market is going to go, not version 3 or version 4 or version 5 with a gold membership! The only one that will get richer is the shady company offering this product.
The best way to trade Forex is to do it either through a professional brokerage company or yourself!

Disclaimer:

All opinions expressed, trade recommendations/advice on this website are solely of John van der Munnik and are not affiliated with any investment firm or any other organization. You should not make an investment only based using this website VDM Trading for your trading needs without seeking help from your own financial advisor.